Massive growth in the need for financial services in emerging markets has demanded financial competitors to adapt and innovate. This has provided tremendous opportunity for fast-acting companies to benefit.
With the banking sectors in two of the four BRIC markets — Brazil and China, facing short and long-term systemic challenges, Indian lenders have held up better than their counterparts, only to falter in the last few weeks.
While China’s banking sector is often considered both megalithic and monopolistic, there are actually over 4,000 small lenders operating in the giants’ shadows. U.S. traders can even get direct exposure to a few.
Today’s news that Singapore is liquidating $2.5 billion in Chinese bank stock should not alarm traders wary of the sector’s health. If anything, by global standards, these banks are among the most solid in the world — if, of course, you believe the official numbers.
Stocks around the emerging world have had a tough week, but the Brazilian financial sector has been lagging the rest of the Bovespa, not to mention banks elsewhere. There’s a good reason for this, and it hasn’t been reported widely.
Traders convinced that China’s banking system is on the edge of collapse can use ETFs to put their money where their mouth is – but the argument that these stocks are poised for disaster has gotten harder to make.
Bloomberg prints a fairly negative case for many investors in the emerging markets highlighting the risks to investment in state-controlled companies across the BRIC nations. All global investors should at least be aware of the issues at stake.
“Two opposing forces are at work” in the Chinese economy, admit the analysts at UOBKayHian. They see downward pressure triggered by the Euro debt crisis and a slowing Chinese economy, but believe the China will be stepping up its efforts to ease the monetary supply and support growth.